Category: Investor Losses

Jun 17, 2026

Crypto Custody Fraud Risks & Losses

Crypto custody is the safekeeping of digital assets—Bitcoin, Ether, stablecoins, and other tokens—by a third party that holds the cryptographic private keys controlling access to those assets. Unlike self-custody, where the investor alone controls the keys, custodial arrangements transfer practical control to a centralized exchange, crypto lending platform, trust company, or broker-affiliated service. Custodial models vary widely. Centralized exchanges such as Coinbase, Kraken, and the now-defunct FTX pool customer assets in omnibus wallets while tracking individual balances on internal ledgers. Crypto lending platforms like Celsius, BlockFi, Voyager, and Genesis accepted customer deposits and then lent, staked, or reinvested those assets to generate yield. Qualified custodians—typically state-chartered trust companies—hold digital assets for registered investment advisers and funds under the Investment Advisers Act. Brokers and financial advisors registered with FINRA have increasingly steered retail investors toward crypto custody arrangements through referrals to affiliated platforms, recommendations of yield-bearing accounts, and integration of digital assets into retirement portfolios. When these custodians collapse or misappropriate customer funds, the people left holding the losses are ordinary investors—many of whom believed their assets were safe because a licensed financial professional recommended the arrangement.

Keep Reading
Jun 16, 2026

Selling Away: Definition, Examples, and How to Recover Losses

“Selling away” occurs when a broker sells securities through unauthorized private transactions outside a firm’s approved product list. Because the deal bypasses brokerage screening, disclosures, and supervision, investors face fraud risk and may have a harder time recovering losses. The page explains examples, FINRA Rules 3270/3280, penalties, and recovery options like arbitration, mediation, or lawsuits.

Keep Reading
Apr 26, 2026

Mortgage-Backed Securities Fraud

If your broker or financial advisor recommended mortgage-backed securities (MBS) or collateralized mortgage obligations (CMOs) for your retirement portfolio, you may have been the victim of investment fraud. These complex, high-risk products were designed for Wall Street institutions—not for retirees seeking stable income. Yet brokers continue to sell them to conservative investors, often misrepresenting the risks, hiding the fees, and pocketing outsized commissions in the process. The mortgage-backed securities market exceeds $13 trillion, but the vast majority of it is institutional. When individual investors—especially retirees—are steered into non-agency MBS and exotic CMO tranches, the results can be devastating. Losses of 50%, 70%, even more than 100% of the original investment (when margin is involved) are well-documented in regulatory enforcement actions.

Keep Reading
Apr 25, 2026

Real Estate LP Risks & Losses

A real estate limited partnership (RELP) is a securities offering that pools investor capital to acquire, develop, or manage real property, and is typically sold by broker-dealers and financial advisors to accredited investors seeking passive real estate income and tax benefits. Modern successors—Delaware Statutory Trusts (DSTs) and Tenants-in-Common (TIC) programs—have largely replaced traditional RELPs as the dominant vehicle for broker-sold, illiquid real estate investments. Every RELP has a general partner (GP) who manages operations and bears unlimited liability, and limited partners (LPs) who contribute capital but have no management authority. LPs receive distributions proportional to their equity share and report income, losses, and deductions on Schedule K-1. Minimum investments typically range from $25,000 to $250,000 or more, and holding periods run 5 to 15 years.

Keep Reading
Apr 24, 2026

Traded REIT Risks & Losses

A traded REIT (Real Estate Investment Trust) is a publicly listed company that owns, operates, or finances income-producing real estate and whose shares trade on a national stock exchange — such as the New York Stock Exchange or NASDAQ — allowing investors to buy and sell shares like any other publicly traded stock. They are required by federal law to distribute at least 90% of their taxable income to shareholders as dividends, which is why brokers and financial advisors frequently recommend them to retirees and conservative investors seeking current income. Traded REITs fall into three categories. Equity REITs own and operate physical properties — apartments, office buildings, shopping centers, warehouses, healthcare facilities, and data centers — and generate revenue primarily from rent collected from tenants. Mortgage REITs (mREITs) do not own property directly; they lend money to real estate owners or invest in mortgage-backed securities and earn income from the spread between their borrowing costs and lending returns. Hybrid REITs combine both property ownership and mortgage financing, creating simultaneous exposure to rental income risk and interest rate spread risk.

Keep Reading
Apr 23, 2026

Venture Capital Fund Risks & Losses

A venture capital fund is a pooled private investment vehicle — typically structured as a limited partnership — that raises capital from investors and deploys it into early-stage, high-growth private companies in exchange for equity stakes. These funds are managed by a general partner (GP), usually an investment firm or professional fund manager, who controls all investment decisions. Investors participate as limited partners (LPs), commit capital on the GP's terms, and have no role in day-to-day fund management. Venture capital funds are sold primarily to accredited investors — individuals with a net worth exceeding $1 million (excluding their primary residence) or annual income above $200,000 ($300,000 jointly with a spouse). Most funds are structured under Section 3(c)(1) of the Investment Company Act of 1940, which exempts them from SEC registration but limits participation to 100 investors. Larger funds relying on Section 3(c)(7) restrict access to "qualified purchasers" — generally individuals with at least $5 million in investments.

Keep Reading
Apr 22, 2026

VelocityShares 3x Long Crude Oil ETN (UWTI) – Risks for Investors and Loss Recovery Options

Three-times leveraged crude oil exchange-traded notes have destroyed billions of dollars in investor wealth, and the regulatory trail of enforcement actions, arbitration awards, and warnings stretching from 2009 to 2026 makes clear these instruments were never designed for the retail investors who bought them. The VelocityShares 3x Long Crude Oil ETN (UWTI) — once one of the most actively traded securities in America — lost more than 99% of its value before its successor product was forcibly liquidated during the 2020 oil crash. Investors who held these products in retirement accounts, on broker recommendations, or without understanding the daily-reset mechanism suffered catastrophic losses. FINRA and the SEC have repeatedly stated that leveraged ETNs are typically unsuitable for buy-and-hold investors, and enforcement actions totaling tens of millions of dollars confirm that brokers and firms routinely violated these guidelines. Investors who suffered losses from leveraged crude oil ETNs may have legal recourse through FINRA arbitration.

Keep Reading
Apr 21, 2026

Master Limited Partnership Risks & Losses for Investors

A master limited partnership (MLP) is a publicly traded limited partnership that combines partnership tax benefits with exchange-traded liquidity, and is typically sold by brokers and financial advisors to retail investors seeking high-yield income from the energy sector. Most MLPs operate energy infrastructure—pipelines, storage terminals, processing plants, and gathering systems for oil, natural gas, and natural gas liquids. Major issuers include Enterprise Products Partners, Energy Transfer, MPLX, Plains All American Pipeline, and Western Midstream Partners. An MLP has two classes of partners: the general partner (GP) manages operations and typically holds a 2% stake, while the limited partners (LPs) provide capital but have no management control.

Keep Reading
Apr 17, 2026

Derivative Securities – Risks for Investors and Loss Recovery Options

Derivative securities are financial contracts whose value is derived from the performance of an underlying asset, index, or rate. They are typically sold or recommended by brokers, financial advisors, commodity trading advisors, and online trading platforms to retail investors in brokerage accounts, retirement accounts, and margin accounts.

Keep Reading
Apr 15, 2026

Closed-End Funds – Risks for Investors and Loss Recovery Options

A closed-end fund (CEF) is a type of investment company that raises capital through a one-time initial public offering, issues a fixed number of shares, and then trades on a stock exchange at market prices that may differ from the fund’s net asset value (NAV). Brokers and financial advisors at firms like UBS, Merrill Lynch, Morgan Stanley, Raymond James, and Edward Jones routinely recommend CEFs to retail investors—particularly retirees—seeking income.

Keep Reading
1 2 3 4 … 8